What is the annual ordering cost and total annual cost

Assignment Help Financial Management

Reference no: EM131845392

Kee Wah Store sells a variety of exquisite European cookies and candies to the consumer market. The demand for cookies and candies is volatile and varies from s month to month. The store orders from its suppliers. The lead time is normally one month, mainly consisting of the sea freight transportation time from Europe to Singapore. The store keeps a certain level of inventory at its warehouse.

The total demand for chocolate cookies is estimated to be 7, 200 packets a year. The chocolate cookie packet is sourced from the supplier at $5 per packet and is sold to the end consumer at $15 per packet. It costs $100 to place an order to the supplier, and costs 20% of unit cost to store a packet of chocolate cookies for one year.

Examine the inventory situation for Kee Wah Store by applying the EOQ model to solve for order quantity and reorder point.

What is the annual ordering cost , annual holding cost and total annual cost?

Reference no: EM131845392

Questions Cloud

Equipment desirable on net present-value basis : Calculate the net present value. What is the minimum annual cash savings that will make the equipment desirable on a net present-value basis?

International business supply chains : Discuss the role of industry clusters and critically and evaluate the contribution they make to international business supply chains, collaboration

What are some potential solutions to the given challenges : What are some challenges leaders face when managing employee diversity in organizations?

Explain the theories of economic nationalism : Explain the theories of Economic Nationalism, Internationalism, and Critical Radicalism.

What is the annual ordering cost and total annual cost : Examine the inventory situation for Kee Wah Store by applying the EOQ model to solve for order quantity and reorder point.

Fishers effect to calculate the real interest rate : If im using Fishers effect to calculate the Real interest rate but I already have the real interest rate and inflation rate,

Implement a certain political strategy to manage : What is required to formulate and implement a certain political strategy to manage the political risk?

What is a multilingual service system : As Chairman of the Marketing Department at a local university, you are faced with over demand for some marketing courses and under demand for others.

Compute the standard deviation of portfolio : Compute the standard deviation of this portfolio. Compute the beta of each stock and the portfolio in part (a).

User Account

All Pages